When Martin Eberhard and Marc Tarpenning incorporated Tesla Motors in 2003, they aimed to do the near impossible – create practical and desirable electric vehicles when the wider industry had failed utterly to make battery-powered cars mainstream.
As Eberhard, the company‘s first CEO, explained:
"It was beginning to bother me that no major car company seemed to be producing an electric vehicle that I could actually buy. The market seemed ripe for something that looked like an ordinary car but performed like a sports car."
Almost 20 years later, Tesla has surpassed the wildest expectations of its founders to become the most valuable automaker in the world. The EV pioneer has turned the traditional auto industry upside down through visionary leadership, technological innovation and an unwavering mission to accelerate the advent of sustainable transport.
This is the story of how a scrappy Silicon Valley startup rattled Detroit giants and raced past them to pole position with its revolutionary EVs.
An Improbable Beginning
Tesla Motors was the brainchild of Martin Eberhard and Marc Tarpenning. Eberhard, with experience at startups, took on the role of CEO while Tarpenning became Vice President of Engineering.
The company was named after pioneering electrical engineer Nikola Tesla, honouring his spirit of innovation in energy technology. The founders set out to create power-trains and vehicles powered by electricity instead of fossil fuels.
They bootstrapped operations initially before closing a $7.5 million Series A funding in early 2004 led by Elon Musk. The co-founder of PayPal and SpaceX, Musk contributed $6.5 million of the total and joined Tesla‘s Board as Chairman. His Rolodex would prove invaluable in opening doors to high-net worth individuals interested in clean transport.
Key Milestones
| Year | Milestone | Product/Metric |
|---|---|---|
| 2003 | Tesla Motors founded | |
| 2004 | Elon Musk leads $7.5M Series A | |
| 2006 | Roadster unveiled | |
| 2008 | Eberhard ousted, Musk becomes CEO | Roadster launches: 0 to 60 mph in 3.7s |
| 2008 | Musk invests $70M in Series C | |
| 2010 | IPO raises $226M | |
| 2012 | Model S launch | Sells 2900 units in 2012 |
| 2016 | SolarCity acquisition | Expands into solar energy |
| 2017 | Name shortened to ‘Tesla‘ | |
| 2017 | Model 3 launch | Top selling EV globally |
| 2022 | Berlin Gigafactory opens | 1M vehicles delivered |
Flush with funds from Musk and other investors like Google co-founder Larry Page, the company set out to launch its first model – an all-electric sports car that would set the tone for Tesla as a trailblazing innovator.
The Tesla Roadster – Setting the Bar
Rather than start with an affordable sedan or mass market car, Tesla announced plans in 2006 for the Roadster – an all-electric sports car built on a Lotus chassis. Targeted at high performance enthusiasts not eco-warriors, this unlikely first product confounded critics.
The first production EV sports car when hybrids were still gaining acceptance, the stunning 2-seater Roadster packed blistering acceleration thanks to its 288 horsepower motor. It shattered perceptions of EVs as slow or boring with 0 to 60 times under 4 seconds and a top speed of 125 mph.
Most remarkably, it achieved a 245 mile range that nearly tripled other contemporary EVs. The numbers were unheard of in a battery-powered vehicle then.
The $109,000 price tag kept it exclusive but the glowing reviews and celebrity fanbase made the Roadster a sensation. This halo product announced Tesla as a serious automaker that could deliver drop-dead gorgeous EVs high net worth patrons loved flaunting. More importantly, it forced rivals to rethink electric mobility.
Going Mainstream with Model S
Riding high on the Roadster wave, Tesla unveiled plans for its second act – an all-electric luxury sedan called the Model S. With room for 7 adults and competitive pricing from $57,400 before incentives, this striking 4-door marked Tesla‘s play for the upper mainstream.
It introduced sedan practicality paired with excellent performance, stylish cabins packed with tech and improved range. Offering up to 335 miles between charges, the Model S boasted ranges comparable to gasoline vehicles – an enormous achievement in 2012.
As rave reviews poured in, sales growth reflected the Model S widespread appeal. In 2018, Tesla delivered over 145,000 units globally as it expanded production beyond the Fremont factory. The Model S and subsequent variants also introduced Enhanced Autopilot capabilities like automated parking, lane changing, semi-autonomous driving – features unmatched even by high-end European rivals.
The Model S redefined electric mobility – no longer niche, boring or uncomfortable but the opposite. Tesla had succeeded in making EVs aspirational thanks to appealing design, luxury appointments and technology that wowed customers.
Model 3 – Taking EVs Mainstream
In 2016, Tesla took the wraps off its most ambitious project – the Model 3 mass market sedan. Priced from $35,000 before incentives, this electric 4-door was targeted at middle class households who found Tesla‘s earlier offerings too expensive.
The company poured billions into expanding production capacity, including battery Gigafactories across the United States and China. They understood that sizable volumes at lower cost points crucial to achieve Musk‘s goal for Tesla – to expedite the transition to sustainable energy.
But the road to high volume manufacturing was filled with pitfalls. Tesla struggled in 2017 and 2018 as assembly lines failed to hit Musk‘s overly optimistic targets while quality issues plagued early production.
However, Tesla ultimately ironed out the kinks in the supply chain and manufacturing workflows. The sleek electric sedan won praise for tech-savvy features, accessible prices and ranges up to 358 miles. Safety ratings were stellar while over the air software updates kept vehicles current.
When the dust settled, the landmark Model 3 became the world‘s best selling plug-in electric car shortly after launch. Today, Tesla ships nearly a million cars annually as Model 3 and Y variants drive deliveries. The Models S and X remain in production with refreshed variants catering to higher end buyers.
Challenges Along the Way
Executing the vision to spark an electric revolution required immense capital and pushback against established industry Practices. Controversies have dogged Tesla‘s rapid rise.
CEO Elon Musk is renowned for audacious goals and an unconventional leadership style better suited for agile startups than public automotive giants. Shareholders have endured missed targets and production nightmares.
Musk himself trigger an SEC investigation in 2018 after tweeting plans to take Tesla private. The consent decree cost Musk and Tesla $20 million each in fines while forcing Musk to relinquish his Chairman title temporarily.
Tesla also opted for direct online sales and company-owned retail centers instead of independent dealerships. That triggered lawsuits from auto dealers associations fearing disruption to the entrenched franchise model.
Meanwhile Consumer groups filing class action suits alleging sudden unintended acceleration and battery fires. Autopilot safety is hotly debated after multiple fatal crashes involving Tesla vehicles on self-drive mode.
For all its success, Tesla still fails to match the production efficiency and profits of giants like Toyota who deliver over 10 million vehicles annually. The company operated at razor thin margins for years before posting its first full year profit in 2021. Questions linger whether the astronomical valuation topping $1 trillion is justified.
Yet Tesla retains an enthusiastic following happy to accept some chaos as growing pains necessary to fundamentally transform personal transport for good. With Musk hinting at a robotaxi fleet, tesla semi trucks and even wilder products, the road ahead promises to be anything but boring for this industry renegade!
